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The Fog of Hype: Causing a Tech Slump?

What if I invented a new software trend, called it Software as a Service Architecture 2.0, and claimed that it was going to change everything? SAP would be dead and gone in a heartbeat. Oracle and its Fusion applications too. Salesforce.com, IBM and Microsoft all goners… I wish I could say that I’d be laughed […]

Written By

Joshua Greenbaum

Jan 23, 2007

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What if I invented a new software trend, called it Software as a Service Architecture 2.0, and claimed that it was going to change everything? SAP would be dead and gone in a heartbeat. Oracle and its Fusion applications too. Salesforce.com, IBM and Microsoft all goners…

I wish I could say that I’d be laughed out of the industry, but I’m afraid that’s not necessarily true. The reason? The hype cycle is out of hand, and all too often hype – no matter how ridiculous – is given equal time with reality.

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Until reality starts to catch up to and overtake hype, too many gee-whiz acronyms and “cool” ideas will be chasing too many confused IT buyers, who in turn will continue to let their confusion lead their buying decisions – or lack of buying decisions, to be more specific. And therein lies the origins of real problem for real software companies.

I say this as the current earning season starts with a whimper, not a bang. SAP just warned, there are problems over at Intel, tech stocks are dropping, and the pessimists are starting to talk about a general slump in IT spending that could make 2007 a pretty lousy year for all concerned.

Meanwhile, I’m reading more about how Web 2.0, Office 2.0, and every other manifestation of what is really Dotcom 2.0 is going to take over the world. A world that, I will add, swoons every time Google bats an eyelash, as though this advertising company has done anything other than disintermediate traditional media companies from their revenue.

And then there’s software as a service – which somehow means the end of software, according to Salesforce.com’s Marc Benioff, as he touts his latest attempt to sell more software by morphing into an infrastructure player. SaaS is a great idea, don’t get me wrong – but anyone who think SaaS has any value without substantial functional differentiation doesn’t understand the difference between service delivery using a model as old as the hills (timesharing), and genuine innovation.

Did I mention SOA? Here’s where I have to leave the world of irony for a bit and make a fabulous prediction. SOA has been part of the reason for the slump: SOA was oversold and underdelivered by pretty much everyone in the business – even those who said from the get-go that SOA was going to be hyper-hyped until there was actually something there to sell.

That something is now here, and if anything leads the market out of its current doldrums it will be SOA. Every customer I talk to is doing SOA, and doing it for the right reasons: small, midmarket, and multi-national, SOA is about to take off.

Of course, that doesn’t necessarily turn it all around. SOA will only lead the market, it won’t constitute the revival of the entire software market by itself. Because what the market wants – and what I still think is missing – is functional differentiation and genuine innovation. SOA will be a platform, just like SaaS is a platform. But it will be up to the real innovators to sell something substantial to make the platform worthwhile.

I think the enterprise software market – and the enterprise software buyer – have to think long and hard about how to disentangle themselves from the hype machine that is confusing, not clarifying, the direction of technology today.
You can’t get something for nothing, no matter how hard you try. Software companies are going to have to remind everyone that they make products, and those products cost money, despite market trends that try to pretend that value and cost are unrelated. And customers will have to remember that they need to pay for value, instead of just assuming it arrives for free on their company’s T1 line as part of their birthright.

Until a little reality arrives, we’ll be stuck in a surreal world full of lots of great products from real companies and lots of real money from genuinely interested customers trying, and failing, to find each other through the fog of hype. It’s a slump alright – but one that we all helped make and that we all have to help undo. Or else.